Federal Circuit Confirms Time Bar Under § 315(b) Is Waivable
Notwithstanding the jurisdictional nature of the time bar under § 315(b), the US Court of Appeals for the Federal Circuit determined that a party may waive a time bar argument if it failed to raise the issue with the Patent Trial and Appeal Board (PTAB) during the inter partes review (IPR) proceeding. Acoustic Tech. Inc. v. Itron Networked Solutions, Inc., Case No. 19-1061 (Fed. Cir. Feb. 13, 2020) (Reyna, J.).
Acoustic sued Silver Spring Networks for patent infringement. Less than a year after it was served with a complaint, Silver Spring filed an IPR petition challenging the asserted patent at the PTAB. Weeks before it filed the IPR petition, Silver Spring entered into negotiations with Itron Networked Solutions regarding a potential merger. It was undisputed that Itron was time barred under § 315(b) because several years earlier, Acoustic had served Itron with a complaint alleging infringement of the same patent.
As part of the parties’ merger negotiations, the executives met to discuss the potential merger, Itron conducted due diligence into Silver Spring, details of the merger were discussed, and a formal merger agreement was negotiated. Before the merger was completed, Silver Spring filed the petition and the PTAB subsequently instituted review. Nine days after institution, the parties agreed to the merger, which was completed four months later. A few days later, Acoustic learned of the merger, and Silver Spring updated its mandatory notices to list Itron as a real-party-in interest on the petition. Acoustic never raised a time bar challenge with the PTAB. After the PTAB issued a final written decision finding the challenged claim unpatentable, Acoustic appealed.
On appeal, Acoustic argued that the time bar of § 315(b) should be evaluated both before and after institution. Given that Itron was unquestionably time-barred under § 315(b), Acoustic argued that Silver Spring’s plans to merge with Itron before institution and its culmination of the merger after institution means that § 315(b) bars the petition. Acknowledging that it had not raised a time bar challenge with the PTAB, Acoustic argued that the time bar issue was “jurisdictional,” and was therefore not waivable.
The Federal Circuit disagreed, finding that in certain circumstances, a party can waive its argument that a petition is time barred under § 315(b). In previous opinions, the Court had referred to time bar issues under § 315(b) as “jurisdictional,” but it distinguished a challenge to an agency’s “jurisdiction” from a challenge to a federal court’s jurisdiction. In light of that distinction, it held that time bar challenges under § 315(b) are not immune from waiver. Allowing litigants to wait to raise the time bar issue for the first time on appeal would encourage sandbagging. In this case, because Acoustic failed to raise the time bar issue for over seven months between when it learned of the merger up to the PTAB’s final decision, it waived any challenge to the petitioner’s time bar under § 315(b).
Practice Note: The Court reiterated that proper time for the PTAB to evaluate a time bar issue under § 315(b) is at the time of institution. Although it noted potential concerns with concealed merger activities that may be purposely delayed until after institution to avoid the implications of § 315(b), the Federal Circuit declined to clarify whether the PTAB has the authority or an obligation to review time bar issues after institution.